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29 Oct 2021, 13:39
Sören Amelang

New German govt must make PPAs central to energy transition – energy agency

Clean Energy Wire

Long-term company contracts for the supply of renewable energy, known as green power purchase agreements (PPAs), should become a central part of Germany's energy transition, the country's energy agency (denahas said. "To reach the German climate targets, a consistent expansion of renewable energies is needed," argued agency head Andreas Kuhlmann. "Green PPAs are a measure for promoting Germany as a climate-neutral business location and, at the same time, give companies the opportunity to hedge against rising electricity prices." He said businesses showed great interest in the contracts, but added that regulatory hurdles and uncertainty hamper agreements between companies and the operators of renewable plants. The agency called for the renewable energy surcharge to be abolished and the status of PPAs in competition law to be clarified, among other steps to boost the contracts.

The power prices paid by industry are one of the most contentious aspects of Germany's energy transition and its economic impacts. Many companies keep a keen eye on green power purchase agreements (PPA) in order to get a better handle on power prices. These contracts between a power generator and consumer – for example, between a wind park and a factory – specify the terms for the sale of electricity and guarantee long-term price security. But the volume of new renewable energy projects backed by PPAs in Germany trails that of other European countries.

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